Case
An internationally operating portfolio company of a private equity investor had reached a critical stage in its development. While the business was experiencing strong revenue growth, it was simultaneously facing declining margins, limited management information and increasing operational complexity. Although management had access to extensive sales data, there was a fundamental lack of insight into the actual profitability of individual product groups, customer segments and markets.
The shareholder concluded that further growth would only be possible once the organisation gained structural control over performance, pricing, cost allocation and operational efficiency. Through Bridgewell, an experienced Interim CFO was appointed, bringing a strong background in private equity, transformation and performance management.
Challenge
The organisation was operating with historically developed costing models that no longer reflected the realities of the business. Indirect costs were allocated using broad assumptions, resulting in margins being consistently overstated. As a consequence, it remained hidden that several product lines and international markets were generating little or no profit, despite delivering healthy revenue volumes.
In addition, integrated reporting was lacking, preventing commercial, operational and financial decision-making from being effectively aligned.
Approach
The Interim CFO’s first priority was to create financial and operational transparency. Within a short period, a multidisciplinary transformation programme was established, bringing together Finance, Operations, Supply Chain and Sales.
Under the CFO’s leadership, a new data and reporting landscape was implemented, including extensive automation of financial and operational data flows. This enabled the organisation to transition to an Activity-Based Costing (ABC) model, allowing costs to be accurately attributed to products, customers and activities.
This provided entirely new insights into:
- Profitability by product group;
- Actual margins by customer and market;
- Operational inefficiencies;
- Hidden cost drivers;
- The impact of logistics and production complexity.
Outcome
The insights generated by Finance ultimately became the foundation for strategic decision-making across the business. The product portfolio was significantly optimised, loss-making activities were discontinued, and commercial focus shifted towards markets capable of delivering structurally higher returns.
Furthermore, the enhanced management information facilitated a more professional dialogue between management and shareholders, while forecasting, pricing strategies and investment decisions improved significantly.
Within twelve months, the transformation delivered:
- A substantial improvement in EBITDA;
- Greater predictability of financial performance;
- Simplification of operations and the product portfolio;
- Significantly enhanced management information;
- A scalable finance platform capable of supporting the next phase of growth.
The Interim CFO played a role that extended well beyond traditional finance responsibilities. Through data-driven insights, analysis and strategic leadership, Finance became a key driver of the organisation’s commercial and operational direction.
The Role of Bridgewell
Bridgewell was selected by the private equity shareholder due to its strong track record in senior finance transformation assignments within private equity-backed environments. Within a short timeframe, Bridgewell introduced a highly experienced Interim CFO with a proven background in complex transformation, change management and performance improvement programmes across international organisations.
